Telecoms and Technology Report Turkey 1st Quarter

Telecommunications revenue in Turkey as a percentage of GDP is broadly similar to that in most developed European countries, but Turkey's telecoms sector has considerable growth potential, given the country's young population and rising incomes. The Economist Intelligence Unit expects the population to rise from an estimated 74.7m in 2012, with an average age of 29, to almost 78m in 2017. At purchasing power parity (PPP), GDP per head will increase from US$15,100 in 2011 to US$20,200 in 2017.

In 2010-11 the sector recovered strongly from the recession brought on by the 2008-09 global economic crisis, when companies were forced to cut costs and consumers reined in spending. Reflecting weaker global economic conditions and slower credit growth, Turkish economic growth slowed from 8.6% in 2011 to an estimated 2.7% in 2012. We expect it to accelerate to 3.8% in 2013 and about 5% a year during 2014-17.

Turkey's regulatory body, the Information and Communication Technologies Authority (ICTA), has promoted competition much more aggressively in the mobile market than in the fixed-line and broadband segments. This has benefited Turk Telekom (TT), the former state company which is still not fully privatised. We expect TT to remain the dominant player in the fixed-line sector, which might favour growth at its mobile phone subsidiary, Avea, the smallest of the three mobile network operators.